Market Opening under Third-Degree Price Discrimination
AbstractThere are frequently regulatory and antitrust pressures for firms to cease price discrimination and practice uniform pricing. Such pressures, however, generally have negative welfare consequences when they lead to weaker markets not being served. This paper derives conditions that determine when price discrimination will induce service to a market (market opening) that would not be served under a regime of price uniformity. The factors that favor market opening under price discrimination are a large market share for the strong market, profit margins in the two markets that are far apart, and concave rather than convex demand curves. Copyright 1994 by Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Industrial Economics.
Volume (Year): 42 (1994)
Issue (Month): 3 (September)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- Aguirre Pérez, Ignacio & Cowan, Simon & Vickers, John, 2009.
"Monopoly Price Discrimination and Demand Curvature,"
2009-39, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- I�aki Aguirre & Simon Cowan & John Vickers, 2010. "Monopoly Price Discrimination and Demand Curvature," American Economic Review, American Economic Association, vol. 100(4), pages 1601-15, September.
- Armstrong, M, 2008.
Open Access publications from University College London
http://discovery.ucl.ac.u, University College London.
- Hong Hwang & Yan-Shu Lin & Chao-Cheng Mai, 2007. "Spatial pricing, optimal location and social welfare with consumer arbitrage," The Annals of Regional Science, Springer, vol. 41(3), pages 619-638, September.
- Edward Lopez & David Molina, 2010. "Third-Degree Price Discrimination: Apology Not Necessary," Atlantic Economic Journal, International Atlantic Economic Society, vol. 38(4), pages 383-397, December.
- Simon GB Cowan & Simon Cowan, 2008. "When does third-degree price discrimination reduce social welfare, and when does it raise it?," Economics Series Working Papers 410, University of Oxford, Department of Economics.
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